Infineon plans extensive cost reductions

In light of the continued weakness in the technology sector worldwide, Infineon Technologies AG, Munich, Germany, is planning to streamline company operations in order to reduce costs. As part of the restructuring efforts, about 5,000 jobs, or 17.2% of Infineon's workforce, will be cut or reduced to part-time status.

The restructuring program, named "Impact," is expected to save roughly $880.3 million over the next 12 to 18 months and help improve the company's cash position and earnings.

Among the areas affected will be procurement, logistics, information technology, and manufacturing in the company's various business units.

Market analysts estimate that in 2001 the worldwide semiconductor market will decrease by more than $60 billion compared to last year.

"Due to the fact that there are still no clear signs of a recovery in the global semiconductor market, we have informed our supervisory board on July 25 that additional, more extensive steps are now necessary on top of the cost-cutting program we already initiated," said Ulrich Schumacher, president and chief executive of Infineon, in a statement.

"Regrettably, a cost-saving program on this scale inevitably means reduction of the workforce worldwide. But the dramatic developments in the market and our business situation leave us no choice."

Infineon had already announced an initial round of cost-cutting measures which included a reduction in investments over the current fiscal year by $440.2 million to $2 billion; a reduction of more than $880.3 million to $1.3 billion in investments planned for the coming fiscal year; an almost complete hiring freeze; and no replacing of personnel lost through attrition.